Ukraine

Ukraine: Legal Impact of Ukrainian Law on Crimean Port Calls

The legal effect of "closure" of Crimean ports on charterparties requiring calling at Crimean ports
It has been widely reported that the Ukrainian Government has published Directive No. 255 "On Closure of Sea Ports" which, with effect from 15 July 2014, "closed" all ports in Crimea due to the on-going hostilities taking place in that region. Ports affected by this "closure" include Kerch, Sevastapol, Evpatoria, Theodosia and Yalta.

Members who are engaged in trade to and from Crimean ports will no doubt be concerned about the way in which these closures may impact upon their rights and obligations under charterparties and bills of lading that require loading, discharging or otherwise calling at a Crimean port. Many of the charterparties and bills of lading that govern these rights and obligations will be governed by English law.

English law position
In certain circumstances English law recognises that a contract which becomes illegal in the place of performance will not be enforceable (Ralli Bros v. Compania Naviera Sota y Anzar (1920) 5 Ll. L. Rep. 371) .

If this doctrine applies it may mean, for example that:

A. An order under a time charterparty to proceed to a Crimean port may not be a legitimate order, or

B. A voyage charterparty or bill of lading contract requiring a vessel to call at a Crimean port may not be enforceable, or

C. A charterer may be obliged to re-nominate a port of loading or discharge.

Practical and legal issues
There are however, a number of difficulties for members in invoking this doctrine in the context of the rapidly evolving situation in the Crimean region. Some of these difficulties are as follows:

1. The scope and application of the Ukrainian Government's "closure" of Crimean ports is unclear. For example, it appears that the Directive may not, as a matter of strict construction, apply to cargo operations at certain anchorages which have previously been treated as being outside the jurisdiction of the port.
2. Although the majority of the international community presently asserts that Crimea remains part of Ukraine (See UN General Assembly Resolution 68/262 of 27 March 2014 "Territorial integrity of Ukraine"), difficult issues of public international law arise concerning the right of a government to close ports without the means of enforcing such a closure.

In the circumstances, members may find themselves in the difficult situation of being obliged, under a relevant contract, to call at a Crimean port, even though this may expose the member, the vessel and the crew to possible sanctions under Ukrainian law.

Loss prevention
Given the above difficulties and the considerable uncertainty that remains surrounding the scope of the closure of Crimean ports, members are advised to give very careful consideration to these issues before entering into new contracts which may oblige them to trade to Crimea.

Members with existing contracts that may require the vessel to call at Crimea are advised to contact their Skuld Business unit in order to discuss any steps that need to be taken in order to protect their position.

Should members have further queries, they are asked to contact the Association: lossprevention@skuld.com